Could in-vehicle payments be the next payments frontier?

The average American spends over 61 minutes a day in their car, according to the American Automobile Association (AAA) – that’s equivalent to more than three years of their life! What’s more, that number is growing, up nearly 6 minutes from 2020 to 2021.

As we spend more time in our vehicles and new technology abounds, the possibility emerges for our car’s front seats to become the new payment arena. As cars become ever-more sophisticated, consumers will be able to pay using onboard interfaces, saving the time and hassle of having to hold their credit card out of the window or pulling over and getting out their phone. This new frontier is known as ‘in-vehicle payments’.

What are the benefits of in-vehicle payments?

The scope is immediately apparent. If the car is running low on fuel, it can order the right amount of fuel at the nearest petrol station and then the driver simply has to confirm the action on the car screen. Similarly, the car can mediate payments for parking, toll roads and even fines.

The growth in potential for in-vehicle payments has really been pioneered by electric car makers, who, faced with the need to design from the chassis up, were able to completely reinvent some of the onboard systems and rethink what a car is for. Over the last 5-10 years, some of the most exciting innovations in the automotive industry have been driven by the EV sector. As technology continues to advance, OEMs will try and replicate the success of smartphone makers in understanding users and user habits.

“Traditional internal combustion engine (ICE) vehicles have rigid dashboards but EVs are designed with more exciting offerings,” says Phaneendra Pulietikurthi, Technology Innovation Manager for EY. “Leading models use tablet-style interfaces in their cars to offer increased accessibility and entertainment capability.”

Pulietikurthi continues: “User data will help automakers create car profiles. Smartphones know everything about their users including where they shop, their habits and when they go out for recreational purposes. Similarly, connected cars will use consumer data to create a profile of users, including a financial profile of what you like and even helping to improve your time management.”

Barriers to adoption must still be overcome

Nonetheless, despite the exciting possibilities, there are still hurdles that need to be overcome before in-vehicle payments can be truly mainstreamed. In part, this is a side-effect of the technology being such a nascent part of the fintech picture.

“There are consumer and industry-wide barriers for in-vehicle adoption, but many of them are already being demolished as technology continues to mature and established payments processing corporations integrate with external companies,” Pulietikurthi says. “For example, we’ve recently seen established car makers collaborating with tech giants to integrate voice recognition and virtual assistants into their cars, offering greater value and more personalisation for customers.”

Igor Kosirevs, Deputy Head of Customer Relationships at payment processor DECTA, says: “These types of payments are still in the early stages of development. The technology hasn’t fully caught up with the demand yet and there are still difficulties with authorising such transactions from a payment security point of view.

“In addition, the methods of payment identification, ways of selecting goods (such as voice dialling), and an inability to concentrate on the screen for long periods of time due to traffic hazards are factors preventing in-vehicle payments from overcoming common payment methods. Perhaps most of these issues will be resolved with the development of more advanced autopilot systems.”

In-vehicle payments raise safety concerns

As with any financial service, safety and security are paramount. Our money is our most important asset and so the integrity of payment systems is incredibly important. Add in to that mix the automotive industry – one of the most safety and security-conscious industries out there, with regular and thorough testing and stringent regulations, albeit where there has been a history of things going wrong – and you soon understand why the prospect of in-vehicle payments is beginning to turn heads.

“Security has always been a concern – specifically in areas relating to financial services and payments,” Pulietikurthi explains. “But the industry continues to push forward and, just as hackers become more sophisticated, cybersecurity matures and becomes much more advanced.

“One step we can take is to implement the same fundamentals for card transactions or mobile devices for in-vehicle purchasing. The growth in authentication technologies, like biometric scanning, can also be implemented within the cockpit to increase security. However, in cases of mistaken or fraudulent transactions, there must be a streamlined process implemented by the merchant for consumers to report, reverse and, if required, be reimbursed.”

Igor Kosirevs believes that the encryption that exists within the payments industry is already sufficient to safeguard against any concerns: “Payment cards’ data protection and fraud prevention technologies are far more advanced than car anti-theft systems, so current encryption protocols along with other methods used by payment systems provide a sufficient level of protection for in-vehicle payment data.”

Exciting future use-cases for in-vehicle payments

Despite the potential obstacles, both of our experts are excited about the future of in-vehicle payments – and, particularly, how paying through your car’s built-in interface could make our lives more convenient and our wallets more connected.

“The next step will be to integrate payment methods into the car itself, and we’re already seeing increasing demand, especially for activities such as paying for groceries. This is all possible,” Phaneendra Pulietikurthi says. “Apps linked to large retailers can be integrated into the dashboard experience. Equally, new payment features will also be safety conscious, as consumers won’t be able to use them while driving but passengers will.”

Igor Kosirevs adds: “Cars could become part of the smart house integration. In this case, we could talk about online grocery shopping for the home without leaving the car, through integration with the fridge using the ‘pick-up and drive; system, where a standard, pre-prepared set of groceries can be selected on the way and paid for by the car. When you drive up to the shop, the employee simply puts the bag of groceries in the boot and that's it.”

Pulietikurthi continues: “These innovations will lead to more accessibility options for passengers and drivers not in transit, who will be able to integrate with apps to place orders and make purchases. We have all used e-wallets, apps and micro-apps in our smartphones for payments, but the next evolutionary phase is to design new Human-Machine Interfaces (HMIs) for seamless, frictionless and contactless payments powered by secure integrations with financial vendors.”